Sri Lanka’s construction sector has collapsed as a result of the sky rocketing of prices s of building materials, including cement and steel, in recent months has compelled the government to pay 20 percent extra to contractors who have undertaken its mega projects.
The National Construction Association of Sri Lanka (NCASL) disclosed that more than 600,000 workers have lost their livelihoods due to the collapse of the construction industry caused by the rise in prices of cement and other raw materials.
NCASL Chairman Susantha Liyanaarachchi said: “More than 1.2 million workers belonging to the lowest economic strata of society are employed in the construction industry. However, with the collapse of the construction industry by 50% due to the crisis situation, more than 600,000 of them have lost their livelihoods.”
He noted that the construction work of small and medium scale building contractors and workers will come to a standstill by next week due to shortage of building material an dat present 50 percent of their work has already beeen halted.
The construction sector is also facing a severe crisis due to the rising prices of construction material including cement.
“A tonne of steel which was Rs. 288,000 has now risen to Rs. 300,000. Even the steel that had previously been paid for has to be bought at new prices now.
In addition, cement prices rose by Rs. 100 in January, Rs. 125 in February, and Rs. 350 this month. Accordingly, the new price of a bag of cement is Rs. 1,900. When the raw material prices are going up in this manner, how can we afford to buy them?” he asked. .
He also said that despite a huge publicity given to open a new cement factory in Hambantota, not a single bag of cement has been released to the market from the said factory so far.
Liyanaarachchi further claimed that the main reason for the collapse of the construction industry at a time of great economic crisis in the country was the lack of management by the relevant authorities.
The Chairman of All Ceylon Masonry Association, Nuwan Sumeda stated that currently, the country is facing a very serious breakdown in the field, because the price of cement is increasing daily along with the prices of other material.
He said that in his company almost 15-20 employees used to work, but now there are less than 5 masons employed, adding that similar situations are experienced across the country.
However, currently, a bag of cement has gone up to Rs.1900/-, he alleged, noting that the current market operates like a mafia.
Projects awarded by the government during the three months before December 6, 2021 will qualify for a 20% increase or the compensation due to price variations of materials.
In terms of the procurement guidelines under the Construction Industry Development Act, the Finance Ministry has sent out a letter to ministries, instruction them to grant the compensation due to price adjustments
However, industry sources expressed dissatisfaction over the concession, saying that the relief had come too little too late.
They said that the industry was overburdened with price volatility of materials, especially cement. The steep hike in cement prices and the scarcity of cement and other material has made the concession meaningless.
The industry has been crippled by the non-availability of cement in the market and the curbs on imports due to the deepening foreign exchange crisis.
The Association’s President, Susantha Liyanarchchi, said that although the government had added 17 more importers to its list of importers as a mitigatory measure to address the problem, the shortage of cement continues.
With less than 50 percent of the country’s requirement available in the market the price of a 50 kg bag of cement, which was about Rs. 1000 in October last year is now sold at Rs. 1375. In the black market, the bag of cement is sold at prices varying from Rs. 1750 to Rs. 2000.
The country needs around 7 million metric tonnes of cement a year. About 70 percent of the demand is met by imports. .
An estimated 8000 hardware shops depend on the construction industry and without cement, no other building material sells, an industry source said.
